Levered Free Cash Flow

$
Cash from operations
$
Investment in assets
$
Principal paid down
$
New debt issued
Finance

Calculate Levered Free Cash Flow (LFCF) to equity holders. LFCF is cash available after debt service, used for dividend valuation and equity returns analysis.

Formula

LFCF = OCF − CapEx − Debt Repayment + New Borrowing
  • OCF = operating cash flow; CapEx = capital expenditure; Levered FCF accounts for debt service

Levered FCF

Inputs
  • Operating Cash Flow (OCF): 500000 $
  • Capital Expenditure (CapEx): 100000 $
  • Debt Repayment: 50000 $
  • New Borrowing: 30000 $

OCF $500k − CapEx $100k − Repay $50k + Borrow $30k = LFCF $380k

Frequently asked questions

How is LFCF different from FCF?
FCF is unlevered (before debt); LFCF accounts for debt service and is available to equity holders.
Why are both in the formula?
Debt repayment reduces cash to equity; new borrowing adds cash available to equity.
Is negative LFCF bad?
Can be acceptable if reinvesting; indicates company needs external financing or debt reduction.